First Steps to Reducing Legal Threats in Your Business
As a small to mid-sized business owner, you probably feel like you’ve done a pretty good job with your vendor and customer contracts, employee procedures, and leases. But when was the last time you reviewed those legal documents? Your company could have unknown legal threats resulting from out-of-date or incomplete agreements.
It’s important to regularly review legal documents, and then update as necessary. For most businesses, the areas with greatest exposure are contracts, the employee handbook, and leases.
A poorly written contract can put your business in both financial and legal risk. At the same time, an overly complex contract can bring up more questions than it meant to prevent when there is a problem. Your contract might have terms that are proving to be too difficult to uphold or unfair terms that need to be renegotiated. Or your contract might be missing crucial terms, including those that cover disputes and breaches.
Expiration dates and renewal clauses are sometimes excluded, or overlooked and forgotten about at the end of a contract term. Carrying on with an expired contract could imply affirmation of an old contract, and then cause problems when one side stops performing. It’s important to keep up renewal dates for contracts that automatically renew so you don’t miss an opportunity to exit or update terms and sign a new contract.
A good contract should have a clause defining actions in a breach. This protects both sides should one unexpectedly drop out.
A dispute resolution clause is also important as it lays out rules to follow when parties disagree. These generally cover which jurisdiction’s laws govern the contract, which governing authority oversees the dispute, and steps and processes for non-binding or binding resolution terms. While you can still litigate if your contract doesn’t have this clause, you aren’t protected by predetermined provisions.
Update the Employee Handbook
It’s important to regularly update and have an attorney review your employee handbook for regulatory changes, new employment-related laws, changes in corporate policies and procedures, and any other factors that might impact an employee’s rights, privileges and responsibilities. After updating, employers should ask each employee to sign a statement that they have received the policies and read them. This statement should be kept in an employee’s file. Both having a handbook and maintaining a record of employee recognition can help protect a company from lawsuits and claims, such as wrongful termination or discrimination.
The year 2020 has presented several issues for which employers should update the handbook. Covid-19 has forced employers to come up with pandemic policies that update workplace safety and attendance guidelines, modify work-from-home procedures, and reflect new leave policies set in place by the Coronavirus Aid, Relief and Economic Security Act. At the same time, the Supreme Court’s interpretation of “sex” in Title VII legislation to include sexual preference and gender identification should be reflected in discrimination and harassment sections. Many companies are also updating dress codes and other internal policies related to race and politics in the workplace.
Review Commercial Leases
Before signing any commercial lease, you should have an attorney review it. It’s also good practice to have your attorney review your leases at various points. If you are considering expansion and want to modify your lease to add more square footage or move spaces, you should involve your attorney. Or if you are finding that remote work has resulted in a need to alter your contract or space, you should have your attorney evaluate the document before reaching out to your landlord.
Sometimes leases are missing crucial elements, such as the start date or a copy of the space plan that is referenced in the agreement. A regular legal review can identify these missing elements and present opportunities for businesses to enter into a better lease.
Your In-House Legal Team
Let our team proactively prevent legal exposure and operate as your in-house legal team. To learn more about how the experienced attorneys at InPrime can help reduce your legal threats and limit exposure, contact us at 770-407-8889.